That doesn't sound like a "donation", though? At the very least Craiglist tried to portray it as something they're doing out of the goodness of their hearts.
I'm sure Craigslist could have negotiated for a settlement that would have involved money (perhaps less money) going directly to them. And if Craigslist had done nothing the EFF wouldn't be getting any money. So they deserve at least some of the credit.
Giving away a $1M settlement is clearly a donation, and it's "out of the goodness of their hearts" when compared to the obvious alternative: keeping the money.
I wouldn't consider the result of legal settlement to be a "donation". A donation is a voluntary transfer of money. Had craigslist received $1M from a settlement and then voluntarily sent EFF $1M without being specified to in the legal settlement, then that would be a donation. The correct interpretation is that the $1M transfer is part of a legal settlement to resolve a lawsuit. I haven't followed this lawsuit too closely, but it sounds like craigslist might not have had a "open-and-closed" case, hence the need to offer these amenable terms to sweeten the terms of surrender, and thus hasten the resolution.
"As part of the settlement, 3taps and its founder, Greg Kidd, have agreed to pay craigslist $1 million, all of which must then be paid by craigslist to the EFF, "
Yes; specifically, if the proposed settlement was "3taps will give Craigslist $1 million, which Craigslist will have no restrictions on", then 3taps might not have agreed to it.
Maybe CL initiated the requirement that the money was going to go to the EFF after being paid to them? Seems like most of the ill-will related speculation might be just that until there is any evidence either way...